How do public schools get their funding

Thus, state total grants under the EFIG formula are based on each state's share, compared to the national total, of a population factor multiplied by an expenditure factor, an effort factor, and an equity factor, adjusted by a state minimum grant provision.

The equity factor is based on a measure of the average disparity in expenditures per pupil among the LEAs of a state called the coefficient of variation CV. The CV is expressed as a decimal proportion of the state average per pupil expenditure.

In the CV calculations for this formula, an extra weight 1. Typical state equity factors range from 0. The equity factors for most states fall into the 0. In calculating grants, the equity factor is subtracted from 1. As a result, the lower a state's expenditure disparities among its LEAs are, the lower its CV and equity factor will be, and the higher its multiplier and its grant under the EFIG formula will be. Conversely, the greater a state's expenditure disparities among its LEAs are, the higher its CV and equity factor will be, and the lower its multiplier and its grant under the EFIG formula will be.

The EFIG formula also employs a weighted student funding concept in the allocation of grants to states. In the calculation of the formula's equity factor, state and local funds per pupil are calculated using a greater weight for students from low-income families 1.

As a result, a state where greater state and local funds are available for the education of students from low-income families than for other pupils would have a numerically low equity factor and ultimately higher grants under the EFIG formula. The higher the formula child count or rate is, the higher the grants per formula child an LEA would receive will be.

Under the Targeted Grant formula, one set of weighting factors is applied to all LEAs based on formula child counts and one set is applied to all LEAs based on formula child rates. In contrast, under the EFIG formula three sets of weights are used for weighting formula child counts and three sets are used for the weighting of formula child rates. The set of weights used under the EFIG formula depends on the value of each state's equity factor described above , with lower weights applied to LEA grant calculations in states that have a lower equity factor i.

In determining LEA grants under both the Targeted and EFIG formulas, the higher of the two weighted student counts one calculated based on formula child counts and one calculated based on formula child weights is used in calculating grants for each LEA. The Title I-E authority allows the Secretary to enter into a demonstration agreement with LEAs that are using or agree to implement weighted student funding systems to establish budgets for, and allocate funds to, individual public schools.

In order to enter into a local flexibility demonstration agreement under the Title I-E authority, each LEA must have a weighted student funding system that meets specific requirements. The LEA's system must use weights or allocation amounts that provide "substantially more funding" than is allocated to other students to English learners ELs , students from low-income families, and students with any other characteristic related to educational disadvantage that is selected by the LEA.

The system must also ensure that each high-poverty school receives in the first year of the demonstration agreement more per-pupil funding for low-income students than was received for low-income students from federal, state, and local sources in the year prior to entering into the agreement, and at least as much per-pupil funding for ELs as was received for ELs from federal, state, and local sources in the year prior to entering into the agreement.

The weighted student funding system must include all school-level actual personnel expenditures for instructional staff, including staff salary differentials for years of employment, and actual nonpersonnel expenditures in the LEA's calculation of eligible federal funds and state and local funds to be allocated to the school level. It must also allocate a "significant portion of funds," including state and local funds and eligible federal funds, to the school level based on the number of students in a school and an LEA-developed formula that determines per-pupil weighted amounts.

In addition, the percentage of state and local funds and eligible federal funds allocated through the LEA's weighted student funding system must be sufficient to carry out the purposes and requirements of the demonstration agreement. No non-ESEA funds e. Once eligible federal funds are consolidated in a participating LEA's weighted student funding system, these funds are treated the same way as the state and local funds. There are no required uses associated with the eligible federal funds provided that the expenditures are "reasonable and necessary" and the purposes of the eligible federal programs for which funds have been consolidated are met.

A separate development relevant to the adoption of weighted student funding by some LEAs has been increasing interest in the collection and reporting of school-level finance data for public schools. The availability of school-level financial data, based on standard concepts applied consistently nationwide, could be especially helpful in the administration of a key fiscal accountability requirement of the ESEA Title I-A program, as discussed below.

Such data could also inform state and local level consideration of equity among schools and groups of students, and increase transparency regarding budgeting and financial decisions by LEAs. One factor that may help explain this increasing attention is the "comparability" requirement associated with the ESEA Title I-A program.

If all of an LEA's schools participate in Title I-A, then services funded from state and local revenues must be "substantially comparable" in each school within the LEA. The Title I-A comparability requirement is intended to ensure that state and local funds are used to provide a comparable level of services in Title I-A schools compared with non-Title I-A schools prior to the receipt of Title I-A funds.

Comparability is measured only with respect to the public schools within the same LEA, not statewide. It is designed to ensure that federal Title I-A funds provide a net increase in funding for Title I-A schools compared to non-Title I-A schools, and do not simply replace state and local funds that would, in the absence of Title I-A, be provided to the Title I-A schools.

In demonstrating comparability, LEAs are prohibited from using staff salary differentials for years of employment in determining expenditures per pupil from state and local funds or instructional salaries per pupil from state and local funds. In recent years, there has been renewed attention to the extent to which the comparability requirement is being enforced, and to the nature and quality of school-level expenditure data used to determine compliance.

More broadly, a number of other federal requirements and research efforts have reflected this increased interest in school-level finance data collection and reporting. States were required to report total personnel salaries for all school-level instructional and support staff; salaries specifically for instructional staff; salaries specifically for teachers; and nonpersonnel expenditures, if available.

ED provided guidelines on the specific types of expenditures that states and LEAs should include in their reports. States and LEAs were asked to report school-level expenditures from state and local funds only, and to exclude expenditures for special education, adult education, school nutrition programs, summer school, preschool, and employee benefits. All expenditure data was to be reported based on actual expenditures, including those for staff salaries.

In discussing this study, ED stated that, "[t]raditional district allocation methods have been shown to create significant funding disparities between Title I and non-Title I schools.

Separately, ED's Office for Civil Rights began to collect selected school-level expenditure data starting with the school year. These data are captured every second year as part of the ongoing Civil Rights Data Collection, and include total personnel salaries; salaries specifically for teachers, instructional aides, support services staff, and school administrators; and nonpersonnel expenditures.

All expenditure data must be based on actual expenditures. A major concern regarding school-level expenditure surveys is achieving consistency among the states on what kinds on expenditures to include or exclude. The SLFS currently includes 15 unique expenditure items covering a wide variety of personnel expenditures 6 items , including salaries, as well as nonpersonnel expenditures 9 items , such as educational technology. Data for each of the 15 expenditure items were collected two ways: 1 without additional exclusions other than the aforementioned exclusions , and 2 with additional exclusions for expenditures paid from most federal funds, expenditures for prekindergarten, and expenditures for special education.

Beginning with the school year, the SLFS was opened to all states on a voluntary basis. These report cards are to include "the per-pupil expenditures of Federal, State, and local funds, including actual personnel expenditures and actual nonpersonnel expenditures of Federal, State, and local funds, disaggregated by source of funds, for each local educational agency and each school in the State for the preceding fiscal year" Section h 1 C x.

Kern Alexander, Richard G. Salmon, and F. Deborah A. See, for example, L. Dean Webb, Arlene Matha, and K. Forbis Jordan, Foundations of American Education , 4 th ed.

Also see Verstegen Other organizations have added additional categories for state programs, such as being "student based," "resource based," or "program based. These were originally referred to as "Minimum Foundation Programs," but over time the "minimum" reference has been dropped. For a graphic depiction of how Foundation Programs work, see Urban Institute, How do school funding formulas work?

As noted earlier, a "mill" is one-thousandth of the assessed value of taxable property. Thus, an annual tax rate of 25 mills would be 2. According to ECS, "Under a resource allocation model, states distribute resources rather than assigning weights or dollar values based on certain criteria.

For example, the state would provide funding for a prescribed number of teaching positions based on student counts. See, for example, Alexander et al. Rodriguez , eventually landed in the Supreme Court. The court struck down the case, arguing that education was not a guaranteed, fundamental right under the U. This is a national problem.

Since the s, advocates across the country have filed dozens of school finance lawsuits. That litigation spurred critical conversation and important progress, but many large and pressing problems remain. In nearly half of all states, affluent districts still receive more funding from state and local governments for their schools and students than poorer districts.

Dollars must be at the start of every conversation around equity. Funding is a central component to providing a high-quality education and often leads to improved outcomes. A study found that, between and , states that reformed school finance policies in order to allocate more funding to high-poverty school districts narrowed the achievement gap by an average of one-fifth. But allocating equal funding for every student does not guarantee that all students will have a rigorous educational experience.

This idea is at the heart of this report. The authors argue that the efforts to resolve inequities through the courts or with legislation need to move beyond funding. Furthermore, reforms must focus on both funding levels and equal access to resources shown to be fundamental to a quality education. True educational equity will require two central reforms.

First, there needs to be additional resources—not the same resources—in order to meet the needs of at-risk students. The authors came to these conclusions after examining the remedies implemented at the state level in response to a court order or as a result of political pressure created by state litigation.

Past cases, which have focused on the equity or adequacy of school funding, have increased resources for low-income students but have not consistently ensured that all students have access to a high-quality education.

Moreover, in some instances, remedies implemented under these frameworks have led to unintended consequences, including the leveling out of education funding in cases that focus on equity of dollars alone. Based on an analysis of school finance litigation and research on school funding, the authors found the following:. Historically, the federal government has focused its investment in supporting education and related services on the most at-risk children, and it can uniquely address inequities in per-pupil spending across states.

While students within the same school district can receive starkly different levels of funding, the widest variation in per-pupil spending exists across state boundaries.

The school funding debate is as important today as it was in when Rodriguez demanded a better education for his children. Given these findings, the authors recommend principles to guide a new framework for school finance reform: a high-quality finance system. While the past few decades of state litigation focusing on equity or adequacy have increased awareness of the importance of fiscal equity, policymakers must refine the debate in order to achieve a high-quality education for all students.

The authors propose that the following key principles should guide school finance reform at the federal and state levels:. The goals of public education must evolve with the changing world, and today, schools must prepare students for college, career, and civic engagement. Ensuring educational opportunities is critical to the health of U.

A just K public schooling system should meaningfully prepare all students, including the most disadvantaged, for their roles in public service or democratic governance. Without a robust education system, the armed forces would lack qualified recruits. The strength of the economy is also closely tied to education. Recent studies show that gross domestic product GDP has a strong relationship with educational outcomes. In the s, the majority of jobs were available to individuals with a high school diploma or less.

During the recent economic recovery, 95 percent of the jobs created went to workers with postsecondary education or training. Furthermore, education is one of the best predictors of future income. After 50 years of state school finance litigation and school finance reform, some states have minimized inequities in per-pupil education across districts within state lines. However, significant inequities remain. Local, state, and federal governments all contribute to overall education funding and perpetuate some of these inequities.

As a result, local, state, and federal actors must all work to revamp school funding systems with a focus on quality. States, specifically, will have a central role. The right to an education rests with the state, as articulated in state constitutions, and local and state governments provide the vast majority of school funding. Meanwhile, the federal government must continue to focus its funding and support on high-poverty schools and address inequities that exist across state lines.

Although state constitutions indicate that the right to education rests with the state, schools have historically been primarily funded at the local level. Specifically, local property taxes had been the main source of funding for public education. Because districts have vastly different property tax bases, the poorest districts raise less money than more affluent districts, creating disparities in per-pupil expenditures.

New analyses disaggregate the allocations of local, state, and federal governments. Data compiled by the Urban Institute show that local education funding across the country is still highly regressive—although it has become slightly more progressive between and Students in poverty continue to receive less funding than their more affluent peers.

High-poverty school districts in only four states—Minnesota, Louisiana, Tennessee, and Vermont—receive more local funds per pupil than more affluent districts. State funding formulas generally compensate for regressive local funding. In 23 states, high-poverty and affluent districts receive about the same amount per pupil in state and local dollars. In four states, the highest-poverty districts receive significantly less per pupil in state and local funding than more affluent districts.

And in Illinois, high-poverty districts received 22 percent less per pupil in state and local funds than more affluent districts. Times have changed dramatically since the Rodriguez decision, and there is deepening consensus that federal government has an important role in supporting the education of students with the greatest needs. The federal investment in education increases the share of funding allocated to high-poverty districts. These differences are so stark that students in certain states only receive a fraction of funds that students in other states receive.

For example, according to a recent study by the Education Law Center, students in Mississippi only receive about 40 percent of the per-pupil funds of New Jersey students, while students in Alabama receive slightly less than 50 percent of the per-pupil funds as students in Connecticut.

While some states have made progress in addressing disparities within states, unequal access still exists within states. At the same time, inequities are greatest across states lines, as per-pupil spending across states varies dramatically.

Although school finance advocates and policymakers often compare spending between the poorest and wealthiest districts within a state, the differences in district-level spending across states are far starker. These extreme spending inequities have an impact, and a large body of research suggests that money does matter in education.

When school districts spend money wisely, they have better outcomes, including higher test scores, increased graduation rates, and other improved indicators of student achievement. This has clear implications for the public school system, as students who do not get their fair share of dollars do not get an equal chance to compete with their more advantaged peers. For instance, according to a recent National Bureau of Economic Research NBER study, state fiscal reforms have had a positive impact on student outcomes—particularly among low-income students.

In fact, the study found that spending increases improved high school graduation rates among low-income students and increased their adulthood earnings by 10 percent. Note that, when it comes to policy approaches, foundation plans are most similar to an adequacy framework—a point explored in greater detail below. Another recent NBER study confirmed this idea that fiscal reforms in adequacy cases have led to more progressive funding systems and increased student outcomes.

These reforms also contributed to student gains in reading and mathematics, with the largest increases among low-income students. Relatedly, beginning in , a decline in public spending on education has negatively affected student outcomes.

During the Great Recession, state and district funding for public education declined dramatically. Kirabo Jackson, a professor of human development and social policy at Northwestern University, asserts that the decline in National Assessment of Educational Progress NAEP scores in and is tied to the decline in education spending following the Great Recession. Inequities go beyond money. Core services, which make a huge difference in instructional quality and student performance, are systematically unavailable to students in low-income schools relative to students in higher-income schools.

Put simply, school funding debates must go beyond the raw numbers and evaluate whether students have equitable access to the resources needed for success, including early childhood education, quality teachers, and exposure to challenging curriculum. Early childhood education is a critical tool to level the playing field for students in poverty who generally start school academically behind their more affluent peers.

For example, some studies suggest that, compared with their higher-income peers, low-income students start school with a smaller vocabulary.

Yet students in poverty are less likely to attend preschool programs. The effectiveness and experience of teachers also have a pronounced impact on instructional quality. No other in-school factor has as significant an impact on student achievement as the teacher at the front of the room. In Washington, D. Higher-poverty schools also have fewer experienced teachers and greater teacher turnover. Forty-seven found these programs generated overall fiscal savings for taxpayers; four found programs were cost-neutral; and one found a Louisiana program for students with exceptional special needs generated net costs.

Given that a large majority of students that participate in private school choice programs tend to be switchers on average between 84 percent and 90 percent , it is not surprising that these programs generate significant fiscal benefits for states and school districts by relieving pressure on their budgets.

What each analysis has found is that public schools have some fixed costs, but most of their costs are variable, meaning costs are reduced when students leave the same way costs increase when new students enroll. That was true long before school choice programs existed, and it will continue to be.

The state governments gather and distribute a significant amount of funding for schools through state sales and income taxes, lotteries, and property taxes. Local governments also often contribute through their respective taxation systems as well. Many raise serious questions about how our schools are funded. The Washington D. However, according to the statistics catalogued by the OECD Organization for Economic Development and Cooperation ; the results in this district are inexplicably poor.

Whether this is due to improper usage of funds towards teacher resources, or the lack of opportunity for these students is unclear; however, it is clear that more money does not equal better education.